DeFi in China lacks Venture Capital in the Process of Application
How is the ongoing development of DeFi in China?
Obviously, China has lagged behind the West countries. According to the statistics of DeFipulse, there is no Chinese developer team in the top 10 of the DeFi protocol; even in the whole list, there are no more than three Chinese developer teams, all of which have lagged behind.
The number of entrepreneurs is poor, and the corresponding investment institutions are also scarce in China for DeFi. High-quality projects from foreign countries are difficult to touch, while few domestic projects is valuable to invest in.
If there are no projects to invest in, the number of investment institutions will be further reduced, and the corresponding lack of primary market funds will hinder project entrepreneurship. China’s venture capital circle for DeFi is trapped in such a vicious circle.
What causes the present situation?
On the one hand, China’s developer community is not mature enough. The existing DeFi protocol is mainly developed based on the Ethereum public chain, and most of the developers of these DeFi protocols were the previous developers of Ethereum. However, the core community members of Ethereum are mainly from Europe and the United States. Due to the regional and cultural differences, Developers in China have always been lacking of integration and support from Ethereum foundation.
On the other hand, the application term of DeFi is long and far from profits. Whether it can be implemented or not has always a mystery. It was only from this year that the number of users and the amount of funds increased significantly. These head agreements have been working in silence for many years as Maker was established in 2015 and Compound was established in 2018.
And the profit model of the DeFi protocol can’t be completely clear up to now. Uniswap, which ranks first in DEX (decentralized exchange), is now completely non-profitable. The habit of Chinese entrepreneurs is to focus on the temporary profit. In the face of such an early field, Chinese entrepreneurs usually wait and see.
As the whole world is following the progress in the field of DeFi, China’s venture capital is moving from collective absence to collective exit.
Defi, namely Decentralized Finance, mainly refers to the financial system built based on the public chain technology of blockchain.
Financial industry is the mother of all industry, and the changes of financial industry affect all industries. Whoever controls the financial infrastructure will control the lifeblood of the world economy. Now, all of the financial infrastructures is moving to the field of DeFi.
In the long run, it’s not just finance that will be leveraged by DeFi. It opens the door to the digital migration of the whole human social, economic and organizational relations.